It is an investment which yields pre-determined return for the entire tenor of investment and which does not change on market movements

1. Investment limit is enhanced to Rs 15 lakhs from existing Rs 7.5.lakhs 2. The scheme is extended up to 31.03.2020

The changes in the scheme will help the senior citizens to draw pension up to Rs 10,000 per month .

The investment plan being administered by Life Insurance corporation of India allows senior citizens to subscribe with an assured interest rate of 8 % pa . You may go through the salient features of the plan on this page by visiting section "PRADHANAMANTRI VAYA VANDANA YOJANA "

BANK DEPOSITS ARE MOST PREFERRED INVESTMENT INSTRUMENT IN INDIA NEWS ALERT DATED 06.04.2017 : As per survey report published by Securities and Exchange Board of India ( SEBI ) , more than 95 % of Indians prefer to park their money in Bank deposits . The survey , conducted across India including urban and rural areas , listed Life Insurance as the second most popular investment avenue. Other top investment vehicles included Gold & Silver , Real estate and post office savings . Mutual Funds and Stocks investments were preferred by less than 10 % of the respondents .

Among the rural households , not even one percent invested in financial instruments and more than 98 % had any awareness about availability of Mutual Funds and Equities as an option for investment . However redeeming feature among rural households was that 95 % of respondents had bank accounts and 47 % life insurance . More than 25 % of rural respondents had their post office deposits . ​The survey , conducted by M/S Nielsen , was commissioned in 2015 by SEBI , completed last year and results released now .

GOI 7.75% SAVINGS ( TAXABLE ) BONDS 2018

The 7.75 % Government of India Savings ( Taxable ) Bonds , 2018 is a Bond issued by Reserve Bank of India . The scheme with the backing of Government of India is launched now in replacement of earlier 8% Government of India Savings ( Taxable ) Bonds , 2003 . The bonds can be purchased by Indian Residents and Hindu Undivided Family ( HUF )

4. Payment of principal can be taken only on maturity and no exit option , except for senior citizens with following conditions : A. Lock in period of 6 years for those aged between 60 and 70 years B. Lock in period of 5 years for those aged between 70 and 80 years A. Lock in period of 4 years for those aged above 80 years

5. Bond is neither transferable nor traded in exchanges .

6. Non- residents are not eligible to buy .

7 . Bonds with a face value of Rs 1,000 can be purchased unlimited .

8. Half yearly Interest will be paid on 1st August / 1st February every year for non - cumulative option .

9 . Cumulative amount of Rs 1,703 will be paid at the end of 7 years for cumulative option .

​10 . The bonds will be issued and held in the form of " Bond Ledger Account " by RBI .

11. The bonds are available for sale at Branches of State Bank of India , Nationalised Banks , 3 private sector banks and SCHIL .

COMPARISON WITH EARLIER SCHEME ​ In the times when most of the banks are paying interest rates of 6.25 % to 7.25 % and future of interest rate looking bleak , , the GOI Bonds with 8 % interest had rekindled interest by the investing public . However the new scheme is dampener as interest rate is reduced from 8 % to 7.75 & with increase of repayment period from 6 years to 7 years

COMPARISON WITH FIXED DEPOSITS OF BANKS ​ In the times when most of the banks are paying interest rates of 6.25 % to 7.25 % and future of interest rate looking bleak , , the GOI Bonds with 7.75 % interest will still be interesting to the investing public . Both Fixed deposits of banks and GOI Bonds are taxable and hence make no difference with regard to tax ability . Fixed Deposits of banks offer such facilities as premature closure , loan against deposits at a nominal additional rate and interest option of monthly , quarterly , half -yearly , annually which are not available with GOI Bonds .

COMPARISON WITH NSC AND KVP

While National Savings Certificates ( NSC ) offer an interest rate of 7.6% now , Kisan vikas Patra ( KVP ) is offering a rate of 7.3% pa . NSC mature in 5 years while KVP matures in 115 MONTHS . While investment in NSC qualifies for income tax rebate under 80C of Income tax , KVP is freely transferable . While Government bonds pays semi annual interest , one has to wait for maturity for obtaining interest and principal payment in NSC and KVP .

In the absence of various facilities available in Banks Fixed Deposits like premature closing , NSC ( incentive under 80c ) and KVP ( Transfer-ability ) , only those who can afford to lock in their savings for 7 years and do not look forward for such facilities , may look in to purchase of the bonds which are safest and which yield a good return of 7.75 % in the present times compared with other safe channels available .

GOI 8% SAVINGS ( TAXABLE ) BONDS 2003

Government of India has closed its subscription effective from close of January 2 , 2018 (​For RBI notification on this regard , CLICK HERE ) . Now it is clarified that a new 7.75 % scheme is being introduced shortly for which we have to wait for RBI Notification

The 8% Government of India Savings ( Taxable ) Bonds , 2003 is a Bond issued by Reserve Bank of India . The scheme with the backing of Government of India was launched in 2003 . The bonds can be purchased by Indian Residents , HUF , charitable institutions and Universities

4. Payment of principal can be taken only on maturity and no exit option .

5. Bond is neither transferable nor traded in exchanges .

6. Non- residents are not eligible to buy .

7 . Bonds with a face value of Rs 1,000 can be purchased unlimited .

8. Half yearly Interest will be paid on 1st August / 1st February every year for non - cumulative option .

9 . Cumulative amount of Rs 1,601 will be paid at the end of 6 years for cumulative option .

​10 . The bonds will be issued and held in the form of " Bond Ledger Account " by RBI .

COMPARISON WITH FIXED DEPOSITS OF BANKS ​ In the times when most of the banks are paying interest rates of 6.25 % to 7.25 % and future of interest rate looking bleak , , the GOI Bonds with 8 % interest have rekindled interest by the investing public . Both Fixed deposits of banks and GOI Bonds are taxable and hence make no difference with regard to tax ability . Fixed Deposits of banks offer such facilities as premature closure , loan against deposits at a nominal additional rate and interest option of monthly , quarterly , half -yearly , annually which are not available with GOI Bonds .

COMPARISON WITH NSC AND KVP

While National Savings Certificates ( NSC ) offer an interest rate of 7.8% now , Kisan vikas Patra ( KVP ) is offering a rate of 7.5% pa . NSC mature in 5 years while KVP matures in 115 MONTHS . While investment in NSC qualifies for income tax rebate under 80C of Income tax , KVP is freely transferable . While Government bonds pays semi annual interest , one has to wait for maturity for obtaining interest and principal payment in NSC and KVP .

In the absence of various facilities available in Banks Fixed Deposits like premature closing , NSC ( incentive under 80c ) and KVP ( Transfer-ability ) , only those who can afford to lock in their savings for 6 years and do not look forward for such facilities , may look in to purchase of the bonds which are safest and which yield a good return of 8 % in the present times compared with other safe channels available .

4 . It is a single investment plan for 10 years . Pension can start from next month .

5. One can opt to receive pension monthly , quarterly or annually .

6. The plan will be available for one year from the date of launch 04.05.2017

7. Minimum Pension Rs 1,500 and maximum of Rs 5,000 .

8. No premature exit except exceptional circumstances like treatment for critical illness for self or spouse and 98 % of amount invested will be returned on exit

9 . The interest received will be added to the income and Income tax to be paid as per tax slab .

10 . There is no insurance cover under the policy . On death of policy holder , amount invested will be paid to the nominee

Mode of Pension

Minimum Purchase Price ​

Maximum Purchase Price ​​

Annual

Rs 144,578

Rs 722, 892

Semi- Annual

Rs 147,601

Rs 738,007

Quarterly

Rs 149,608

Rs 745, 342

Monthly

Rs 150,000

Rs 750,000

Comparison with earlier plans : Th new plan when compared with earlier ones looks like watered down version . Similar plans were announced by the Governments in 2003 and 2014 . While earlier plans carried 9% interest ( 9.38 % annually ) , present scheme carries only 8% ( 8.30 % annually ) . Earlier plans allowed life time subscription while present plan restricts for 10 years . Earlier plans had lock in period of 15 years while one has to lock in for 10 years only in new plan .

Comparison with other Fixed deposits products available now :

Presently all government sponsored savings schemes are offering less than 8 % of interest except Sukanya Samriddhi Account which is offering 8.3% which is not suitable for senior citizens . Most of the reputed banks are also offering their interest rates around 6.25 % 7.25 % and some may add 0.25% to 0. 5% for senior citizens . Hence compared small savings and bank deposits , the plan fares fairly well in the matter of interest rate . If one is income tax assessee , the real interest earned will come down .

Some Non- Convertible debentures ( NCD ) offer higher interest rates , but fraught with higher risks which may not be suitable for senior citizens . Some debt mutual funds have been returning the investors with higher returns , but one has to lock in 3 years to get tax advantage . .

In the scenario of falling interest rates , Fixing the interest income for next 10 years looks attractive especially for small investors who do not come under tax bracket , even though the plan has no tax concession or insurance coverage . However in the present economic conditions , a maximum Rs 5,000 pension may make little in managing a household and one has to look for other income revenues to sustain .

Further information and policy documents are available in LIC website which can be accessed by CLICKING HERE

For the Interest Rates applicable to various small savings schemes of Govt of India effective 01.07.2017 , CLICK HERE

​PUBLIC PROVIDENT FUNDS

SALIENT FATURES :

Ideal investment option for both salaried as well as self employed classes.

Non-Resident Indians (NRIs) are not eligible.

Investment up to INR. 1,50,000 per annum qualifies for IT Rebate under section 80 C of IT Act.

The rate of interest on the subscriptions made to the fund varies quarter to quarter as per the announcement done by the Government .

Loan facility available from 3rd financial year up to 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011. The rate of interest is reduced to 8.1% pa from 01.04.2016 and are subject to change every quarter.

Withdrawal permitted from 6th financial year.

Free from court attachment.

An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.

Public Provident Fund(Individual account on his behalf or on behalf of minor of whom he is the guardian)INR. 500/- in a financial yearINR. 1,50,000/- in a financial year

The public provident fund is established by the central government.

One can voluntarily open an account with any nationalized bank,selected authorized private bank or post office.

SAFE , SECURE , TAX EFFICIENT AND LIMITED LIQUIDITY AVAILABLE FROM 3RD YEAR BY WAY OF LOAN FACILITY

Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.

No maximum limit for investment.

No Tax deduction at source.

Certificates can be kept as collateral security to get loan from banks.

Investment qualifies for IT Rebate under section 80C of Income Tax Act.

Trust and HUF cannot invest.

Rate of interest changes every quarter.

NSC can be transferred only once from the date of issue to maturity

KISAN VIKAS PATRA ( KVP )The Government of India has reacently on 19.11.2014 has re-launched KVP . The rate of interest is reduced to 7.8 % pa from 01.04.2016 and are subject to change every quarter. • Certificate can be purchased by an adult for himself or on behalf of a minor or by two adults.• KVP can be purchased from any Departmental Post office.• Facility of nomination is available.• Certificate can be transferred from one person to another and from one post office to another.• Certificate can be encashed after 2 & 1/2 years from the date of issue.

• Minimum INR. 1000/-and Maximum INR. 1,50,000/- in a financial year. Subsequent deposit in multiple of INR 100/- Deposits can be made in lump-sum No limit on number of deposits either in a month or in a Financial year

• A legal Guardian/Natural Guardian can open account in the name of Girl Child.

• A guardian can open only one account in the name of one girl child and maximum two accounts in the name of two different Girl children.

• Account can be opened up to age of 10 years only from the date of birth. For initial operations of Scheme, one year grace has been given. With the grace, Girl child who is born between 2.12.2003 &1.12.2004 can open account up to1.12.2015.

• If minimum Rs 1000/- is not deposited in a financial year, account will become discontinued and can be revived with a penalty of Rs 50/- per year with minimum amount required for deposit for that year.

• Partial withdrawal, maximum up to 50% of balance standing at the end of the preceding financial year can be taken after Account holder’s attaining age of 18 years.• Account can be closed after completion of 21 years.

• If account is not closed after maturity, balance will continue to earn interest as specified for the scheme from time to time.

• Normal Premature closer will be allowed after completion of 18 years /provided that girl is married.

Account can be opened in Post office or specified commercial Banks ( For list of commercial banks and to visit their websites CLICK HERE )

BANK DEPOSITS

Most popular fixed income scheme administered by all scheduled banks

Deposits can be made by resident as well as Non resident Indians . Interest Rates vary .

Fixed Deposit, also called Term Deposit is an investment where the interest rate is guaranteed not to change for the nominated term, so you know exactly what your investment is worth.

The deposits are accepted from 7 days up to 10 years of maturity

Usually Banks lend up to 90 % deposit amount as Loan against the collateral of deposit receipt at an interest rate 1% to 2 % above the deposit interest rate .

The deposits can be prematurely closed . In such cases , interest will be paid for the period run at the interest rate prevailing on the date of deposit for the period of deposit run .

Interest can be received on monthly, quarterly, half yearly , yearly or on maturity .

Interest is taxable and have to be added to the personal income of the depositor

Deposits come under category of Low Risk class of assets of an investor.

Safety of deposit depends up on the repayment capacity of the borrowing company

Investors have to be cautious about the company before they place deposits . Investors are to be beware of Unrated companies / little known companies receiving deposits

For NBFC's, RBI has made it mandatory to have an 'A' rating to be eligible to accept public deposits, . Higher Rating of AA or AAA is better

Caution is the key word while placing deposits with companies .

﻿​

CORPORATE BONDS

A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing is called Bond . The governments, states,corporations, and many other types of institutionssell bonds. Generally, a bond is a promise to repay the principal along with interest on maturity. Issuer may pay interest periodically or on maturity as per the terms of the bond . When an investorbuys a bond, he/she becomes a creditor of the issuer. However, the buyer has no right of ownership of the issuer, while share holders get the right . . Though investor gets interest at the fixed rate periodically and principal on maturity as per Bond conditions , One can sell in between to third parties in stock markets at the market prices for such bonds . If one can hold till maturity , repayment is assured while selling in between may end up with loss and profits . Again like corporate deposits , safety of investment depends up on the capability of the issuer to repay till maturity . The market price of bonds are effected by the interest rate volatility in alternate instruments , liquidity in the market as well as credit rating of the issuer .

AMONG THE FIXED INCOME INVESTMENT , PPF AND NSC/ KVP ARE SAFEST , PPF AND NSC ARE TAX EFFICIENT UP TO CERTAIN AMOUNT , WHILE BANK DEPOSITS OFFER LOW RISK AND LIQUID OPTIONS. COMPANY FIXED DEPOSITS AND CORPORATE BONDS OFFER HIGHER RETURN ASSOCIATED WITH HIGHER RISK . CORPORATE BONDS OFFER LIQUIDITY AND OPTIONS OF HOLDING TILL MATURITY AND GET INTEREST OR TRADE IN THE MARKET FOR PROFIT / LOSS . INVESTORS CAN WEIGH RISK , RETURN AND BENEFITS BEFORE PLACING SUCH DEPOSITS . IN ALL THE CASES RETURN IS PREDETERMINED AT THE TIME OF PLACEMENT OF DEPOSIT

HAPPY TO RECORD www.plannprogress.com has crossed 150,000 PAGE VIEWS THANK ALL READERS , WELL WISHERS WHO HAVE HELPED US TO REACH THE MILESTONE

TO ESTIMATE YOUR CURRENT YEAR TAX LIABILITY AND REBATES YOU CAN UTILISE ​VISITTAX PLANNING

DISCLAIMER

We are not SEBI registered advisor and the the articles contained in the website , including this page , is not an investment advice . In case if you are interested in Investing , you may contact your Financial Advisor for the same . We cannot be held for any loss arising out of your investment made as per the article . ​

DISCLAIMER Use of the information at this site www.plannprogress.com is at one's own risk. We do not offer to sell or solicit to buy any financial instruments including Deposits , Loans whether short term or otherwise , Mortgages , Stocks , Insurance or Mutual Funds .This site does not offer to sell or solicitation to buy any securities and we will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein are purely for educational purposes and does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Before acting on any recommendation, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. Entry to this site is free of charge and we do not charge any fees what so ever . No need for registration for viewing the site . All content and information is provided on an 'As Is' basis by us. Information herein is believed to be reliable, but does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. As a condition to accessing http://www.plannprogress.com content and website, you agree to our Terms and Conditions of Use,Privacy policy & Disclaimer available on the links . The performance data quoted represents past performance and does not guarantee future results.

Articles/ Pages in this site contain advertisements and links to various third party sites / blogs as we have found articles therein interesting and useful and we believe reliable . Those links sites and advertisements may contain offer of sales or services of various kinds including financial services . We accept no responsibility for the accuracy , correctness and/or completeness of any information contained therein as we have not independently verified. The links and third party advertisements are governed by the privacy policy of those third party sites / blogs. We do not warrant or guarantee for any services or sales utilized therein . This site expressly disclaims all warranties and conditions of any kind, whether express or implied. However readers are advised to exercise their discretion in utilising / following any advice contained therein or utilizing any services or accepting their sales or any other offers and we do not take any responsibility what so ever. The site is governed by Indian Laws and comes within the jurisdiction of courts in Mysuru , Karnataka , India Contact Information : The site www.plannprogress.com is owned and operated by Mr . Manjunathan B.N. , No 37, 5thBlock , Madhuvana Layout , Sriramapura 2nd stage , Mysuru 570023 , Karnataka , India and can be contacted at email : info@plannprogress.com